A08169 Summary:

BILL NOA08169
 
SAME ASSAME AS S07199
 
SPONSORCruz
 
COSPNSRAnderson, Solages, Jackson, Simon, Mamdani, Fernandez, Hevesi, Dinowitz, Seawright, Sayegh, Rivera JD, Williams, Joyner, Tapia, Burgos, Barnwell, Colton, Glick, Gonzalez-Rojas, Forrest, Ramos, Aubry, Rivera J, Carroll, Burdick, Bichotte Hermelyn, Epstein, Gallagher
 
MLTSPNSR
 
Amd §3217-b, Ins L; amd §4406, Pub Health L
 
Prohibits certain provisions in insurance and HMO contracts that requires the insurer to include within the scope of the contract all covered groups of the insurer for access to the insurer's network of participating providers and other similar anticompetitive provisions.
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A08169 Actions:

BILL NOA08169
 
07/07/2021referred to insurance
01/05/2022referred to insurance
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A08169 Committee Votes:

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A08169 Floor Votes:

There are no votes for this bill in this legislative session.
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A08169 Memo:

NEW YORK STATE ASSEMBLY
MEMORANDUM IN SUPPORT OF LEGISLATION
submitted in accordance with Assembly Rule III, Sec 1(f)
 
BILL NUMBER: A8169
 
SPONSOR: Cruz
  TITLE OF BILL: An act to amend the insurance law and the public health law, in relation to certain prohibited contract provisions   PURPOSE OR GENERAL IDEA OF BILL: This bill, known as the Hospital Equity and Affordability Legislation (HEAL Act), aims to improve market access and increase transparency of health insurance contracts by banning certain anti-competitive provisions   SUMMARY OF PROVISIONS: Section one of the bill amends section 3217-b of the Insurance Law to prohibit insurers from entering into contracts with certain anti-compet- itive practices including: * Requiring the insurer to include within the scope of the contract all covered groups of the insurer, including groups or benefit funds that contract with the insurer, or an affiliate of the insurer, for access to the insurer's network of participating providers; * Requiring an insurer to include all members of a provider system, including medical practice groups and affiliated facilities, in its network of participating providers; * Restricting the ability of an insurer to create or modify a tiered network benefit plan or requires an insurer to place all members of a provider system, including medical practice groups and affiliated facil- ities, in the same network tier or otherwise limits the right of an insurer to place a provider in a particular tier; and * Prohibiting insurers from using benefit designs, including wellness programs and other benefits, to encourage members to seek services from value-based health care providers. The bill would also prohibit the use of most-favored-nation provisions and allow insurers to disclose price and quality information regarding negotiated rates and other discounts with health care providers. Section two of the bill amends section 4406 of the Public Health Law to make the same provisions for health maintenance organizations. Section three sets the effective date.   JUSTIFICATION: In recent years, hospital consolidation has resulted in dominant systems exercising anti-competitive market power. There have been a number of hospital mergers and acquisitions, with big hospitals acquir- ing smaller ones, along with physician practices. These hospital systems reduce competition and have the market power to dictate price. While these systems assert that the mergers will improve quality and reduce costs, the data does not support that. Instead, they leverage their market power to increase prices when they negotiate rates and contracts with payers. And often these contracts include clauses that prohibit the disclosure of prices. However, the landscape is changing. In Califor- nia, a group of payers sued Sutter Health in a case that was joined by the State Attorney General, They argued that Sutter engaged in anticom- petitive practices that drove up healthcare prices in Northern Califor- nia. In March 2021, a Superior Court of California judge granted prelim- inary approval for a $575 million settlement, which also includes an agreement by Sutter Health to end "all or nothing" contract provisions requiring payers to contract with all Sutter hospitals if they wanted access to any Sutter facility. In New York, there are similar highly concentrated hospital markets. The recent public disputes between payers and the large systems have highlighted the need for increased transparency and visibility to the terms and conditions of such multi- year agreements and how such agreements are contributing to rising health care costs. Large hospital systems that maintain robust provider networks are lever- aging that market share during negotiations to restrict health insurance network designs and access. The result of these anti-competitive negoti- ation tactics is increased costs charged to insurance companies and self-insured entities, which ultimately are passed on to consumers, through premiums and cost-sharing. Importantly, these agreements affect the networks for commercial lines of business including HMO, PPO, individual, small group, large group, self-insured benefit funds, the State of New York, the City of New York, other municipalities, Medicaid, and Medicare Advantage. Several states have enacted legislation to prevent such behavior or pursued antitrust enforcement actions. The contract clauses that have raised the most concern include: * Most Favored Nation Clause: a guarantee that a buyer of goods or services (i.e. a payer) receives terms from a seller (i.e. a hospital or provider) that are at least as favorable as those provided to any other buyer. * All-or-nothing Clause: a requirement that a payer contract with all facilities in a health system if they want to include any facilities in the plan. Provider organizations typically use all-or-nothing provisions to leverage the desirability of their must-have facilities to force inclusion of lower performing facilities. Anti-tiering/Anti-steering Clause: a contractual requirement that a payer place all physicians, hospitals, and other facilities associated with a hospital system in the most favorable tier of providers (i.e. anti-tiering) or at the lowest cost-sharing rate to avoid steering patients away from that network (i.e. anti-steering). Anti-Disclosure: a contractual provision that prevents disclosure of certain contract terms. Exclusive Contracting Clause: a contractual agreement in which a provid- er prevents the payer from contracting with other competitive providers. Under the umbrella of exclusive contracting are exclusive dealing provisions and tying arrangements. This legislation would increase tran- sparency and prohibit certain anti-competitive contracting behaviors that drive up the cost of healthcare services.   PRIOR LEGISLATIVE HISTORY: None   FISCAL IMPLICATIONS: TBD   EFFECTIVE DATE: This act shall take effect on January 1st, 2022.
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A08169 Text:



 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                          8169
 
                               2021-2022 Regular Sessions
 
                   IN ASSEMBLY
 
                                      July 7, 2021
                                       ___________
 
        Introduced  by  M. of A. CRUZ -- read once and referred to the Committee
          on Insurance
 
        AN ACT to amend the insurance law and the public health law, in relation
          to certain prohibited contract provisions
 
          The People of the State of New York, represented in Senate and  Assem-
        bly, do enact as follows:

     1    Section  1. Section 3217-b of the insurance law is amended by adding a
     2  new subsection (m) to read as follows:
     3    (m) (1) No insurer that offers a managed care product or a  comprehen-
     4  sive  policy  that  utilizes  a  network of providers shall enter into a
     5  contract, written policy, written procedure  or  agreement  (hereinafter
     6  and solely for purposes of this subsection collectively referred to as a
     7  "contract") with any health care provider that:
     8    (A)  requires  the insurer to include within the scope of the contract
     9  all covered groups of the insurer, including  groups  or  benefit  funds
    10  that  contract  with  the  insurer,  or an affiliate of the insurer, for
    11  access to the insurer's network of participating providers;
    12    (B) requires an insurer to include all members of a  provider  system,
    13  including  medical  practice  groups  and  affiliated facilities, in its
    14  network of participating providers;
    15    (C) requires an insurer, or an affiliate of an insurer, to include all
    16  members of a provider system,  including  medical  practice  groups  and
    17  affiliated  facilities,  in  all  products  offered by the insurer or an
    18  affiliate of the insurer;
    19    (D) restricts the ability of an insurer to create or modify  a  tiered
    20  network  benefit  plan  or requires an insurer to place all members of a
    21  provider system, including medical practice groups and affiliated facil-
    22  ities, in the same network tier or otherwise  limits  the  right  of  an
    23  insurer to place a provider in a particular tier;
 
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD11774-01-1

        A. 8169                             2
 
     1    (E)  prohibits insurers from using benefit designs, including wellness
     2  programs and other benefits, to encourage members to seek services  from
     3  value-based health care providers;
     4    (F) contains a most-favored-nation provision; provided, however, noth-
     5  ing  in this section shall be construed to prohibit a health insurer and
     6  a provider from negotiating payment rates and performance-based contract
     7  terms that would result in the insurer  receiving  a  rate  that  is  as
     8  favorable, or more favorable, than the rates negotiated between a health
     9  care provider and another entity; or
    10    (G)  restricts the ability of the insurer to disclose price or quality
    11  information,  including  the  allowed  amount,   negotiated   rates   or
    12  discounts,  or  any other claim-related financial obligations covered by
    13  the provider contract to any enrollee, group or other  entity  receiving
    14  health care services pursuant to the contract.
    15    (2)  Beginning  January  first, two thousand twenty-two, any contract,
    16  written policy, written procedure or agreement that  contains  a  clause
    17  contrary  to  the provisions set forth in this section shall be null and
    18  void; provided, however, the remaining clauses  of  the  contract  shall
    19  remain in effect for the duration of the contract term.
    20    §  2. Section 4406 of the public health law is amended by adding a new
    21  subdivision 6 to read as follows:
    22    6. (a) No health maintenance organization that offers a  managed  care
    23  product  or  a comprehensive policy that utilizes a network of providers
    24  shall enter into a contract, written policy, written procedure or agree-
    25  ment with any health care provider that:
    26    (i) requires the insurer to include within the scope of  the  contract
    27  all  covered  groups  of  the insurer, including groups or benefit funds
    28  that contract with the insurer, or an  affiliate  of  the  insurer,  for
    29  access to the insurer's network of participating providers;
    30    (ii)  requires an insurer to include all members of a provider system,
    31  including medical practice groups  and  affiliated  facilities,  in  its
    32  network of participating providers;
    33    (iii)  requires  an insurer, or an affiliate of an insurer, to include
    34  all members of a provider system, including medical practice groups  and
    35  affiliated  facilities,  in  all  products  offered by the insurer or an
    36  affiliate of the insurer;
    37    (iv) restricts the ability of an insurer to create or modify a  tiered
    38  network  benefit  plan  or requires an insurer to place all members of a
    39  provider system, including medical practice groups and affiliated facil-
    40  ities, in the same network tier or otherwise  limits  the  right  of  an
    41  insurer to place a provider in a particular tier;
    42    (v)  prohibits insurers from using benefit designs, including wellness
    43  programs and other benefits, to encourage members to seek services  from
    44  value-based health care providers;
    45    (vi)  contains  a  most-favored-nation  provision;  provided, however,
    46  nothing in this section shall be construed to prohibit a health  insurer
    47  and  a  provider  from  negotiating  payment rates and performance-based
    48  contract terms that would result in the insurer receiving a rate that is
    49  as favorable, or more favorable, than the  rates  negotiated  between  a
    50  health care provider and another entity; or
    51    (vii) restricts the ability of the insurer to disclose price or quali-
    52  ty  information,  including  the  allowed  amount,  negotiated  rates or
    53  discounts, or any other claim-related financial obligations  covered  by
    54  the  provider  contract to any enrollee, group or other entity receiving
    55  health care services pursuant to the contract.

        A. 8169                             3
 
     1    (b) After January first, two thousand twenty-two, any contract,  writ-
     2  ten  policy,  written  procedure  or  agreement  that  contains a clause
     3  contrary to the provisions set forth in this section shall be  null  and
     4  void;  provided,  however,  the  remaining clauses of the contract shall
     5  remain in effect for the duration of the contract term.
     6    § 3. This act shall take effect January 1, 2022.
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